Revenue Increases 38% to $35.3 Million Year Over YearAUM Increases 49% to $43.8 Billion Year Over Year

PALO ALTO, Calif., Aug 02, 2011 (BUSINESS WIRE) --

Financial Engines (NASDAQ: FNGN), the largest independent provider of
investment management and advice to employees in retirement plans, today
reported financial results for its second quarter ended June 30, 2011.

Financial results for the second quarter of 2011 compared to the
second quarter of 2010:i

Revenue increased 38% to $35.3 million for the second quarter of 2011
from $25.6 million for the second quarter of 2010

Professional management revenue increased 49% to $26.5 million for the
second quarter of 2011 from $17.8 million for the second quarter of
2010

Net income was $3.5 million, or $0.07 per diluted share, for the
second quarter of 2011 compared to net income of $1.3 million, or
$0.03 per diluted share, for the second quarter of 2010

Non-GAAP Adjusted EBITDAi increased 80% to $9.4 million for
the second quarter of 2011 from $5.2 million for the second quarter of
2010

Non-GAAP Adjusted Net Incomei increased 70% to $4.2 million
for the second quarter of 2011 from $2.5 million for the second
quarter of 2010

Non-GAAP Adjusted Earnings Per Sharei increased 80% to
$0.09 for the second quarter of 2011 compared to $0.05 for the second
quarter of 2010

Key operating metrics as of June 30, 2011:ii

Assets under contract ("AUC") were $431 billion

Assets under management ("AUM") were $43.8 billion

Members in Professional Management were 518,000

Asset enrollment rates for companies where services have been
available for 26 months or more averaged 12.4%iii

"We continue to see strong growth and are encouraged by customer
reaction to Income+," said Jeff Maggioncalda, president and chief
executive officer of Financial Engines. "We are enthusiastic about the
long-term growth opportunities created by Income+, and we plan to invest
more aggressively to take advantage of these opportunities."

Review of financial results for the second quarter of 2011

Revenue increased 38% to $35.3 million for the second quarter of 2011
from $25.6 million for the second quarter of 2010. The increase in
revenue was driven primarily by the growth in professional management
revenue, which increased 49% to $26.5 million for the second quarter of
2011 from $17.8 million for the second quarter of 2010.

Costs and expenses increased 25% to $30.1 million for the second quarter
of 2011 from $24.1 million for the second quarter of 2010. This increase
was due primarily to an increase in fees paid to plan providers for
connectivity to plan and plan participant data, headcount growth, cash
compensation, and costs associated with enrollment campaigns and member
materials, offset by a decrease in non-cash stock-based compensation
expense.

As a percentage of revenue, cost of revenue (exclusive of amortization
of internal use software) increased to 35% for the second quarter of
2011 from 34% for the second quarter of 2010. This was due primarily to
an increase in fees paid to plan providers for connectivity to plan and
plan participant data, which resulted from an increase in professional
management revenue and contractual increases in plan provider fees as a
result of achieving AUM milestones, as well as an increase in
subadvisory campaign printed materials costs.

Income from operations was $5.2 million for the second quarter of 2011
compared to $1.4 million for the second quarter of 2010. As a percentage
of revenue, income from operations was 15% for the second quarter of
2011 compared to 6% for the second quarter of 2010.

Net income was $3.5 million, or $0.07 per diluted share, for the second
quarter of 2011 compared to $1.3 million, or $0.03 per diluted share,
for the second quarter of 2010.

On a non-GAAP basis, Adjusted Net Incomei was $4.2 million
and Adjusted Earnings Per Sharei were $0.09 for the second
quarter of 2011 compared to Adjusted Net Income of $2.5 million and
Adjusted Earnings Per Share of $0.05 for the second quarter of 2010.

"Financial Engines' full suite of services is now available to more than
5 million retirement plan participants, and more than five hundred
thousand of them are members in our Professional Management program,"
said Ray Sims, chief financial officer of Financial Engines. "We are
pleased with the continued growth of the company and our ability to
reach and help more participants."

Assets Under Contract and Assets Under Management

AUC increased by 44% to $431 billion as of June 30, 2011 from $300
billion as of June 30, 2010.

AUM increased by 49% to $43.8 billion as of June 30, 2011 from $29.4
billion as of June 30, 2010. The increase in AUM was driven primarily by
net enrollment into the Professional Management service, market
appreciation and contributions.

In billions

Q3'10

Q4'10

Q1'11

Q2'11

AUM, Beginning of Period

$

29.4

$

34.0

$

37.7

$

41.0

AUM from net enrollment(1)

1.8

1.0

1.1

2.5

Other(2)(3)

2.8

2.7

2.2

0.3

AUM, End of Period

$

34.0

$

37.7

$

41.0

$

43.8

(1)

The aggregate amount of assets under management, at the time of
enrollment, of new members who enrolled in our Professional
Management service within the period less the aggregate amount of
assets, at the time of cancellation, for voluntary cancellations
from the Professional Management service within the period, less the
aggregate amount of assets, as of the last available positive
account balance, for involuntary cancellations occurring when the
member's 401(k) plan account balance has been reduced to zero or
when the cancellation of a plan sponsor contract for the
Professional Management service has become effective within the
period.

(2)

Other factors affecting assets under management include employer and
employee contributions, market movement, plan administrative fees as
well as participant loans and hardship withdrawals. We cannot
separately quantify the impact of these factors as the information
we receive from the plan providers does not separately identify
these transactions or the changes in balances due to market movement.

(3)

Contributions are estimated each quarter from annual contribution
rates based on data received from plan providers. Contributions are
estimated to have been approximately $0.6 billion in Q3'10, $0.6
billion in Q4'10, $0.6 billion in Q1'11, and $0.7 billion in Q2'11.
These amounts are included in the Other line item in the above table.

Aggregate Investment Style Exposure for Portfolios Under Management

As of June 30, 2011, the aggregate investment style exposure of the
portfolios we managed was approximately as follows:

Cash

4%

Bonds

24%

Domestic Equity

48%

International Equity

24%

Total

100%

Outlook

Financial Engines' growth strategy includes focusing on increasing
penetration within existing Professional Management plan sponsors,
enhancing and extending services to individuals entering retirement and
expanding the number of plan sponsors.

Based on financial markets remaining at June 30, 2011 levels, the
Company estimates that its 2011 revenue will be in the range of $144
million to $149 million and that its 2011 non-GAAP Adjusted EBITDA will
be in the range of $40 million to $42 million.

This outlook reflects plans to spend up to an additional $2 million in
the second half of 2011 to accelerate the development of Income+
capabilities and more rapidly increase enrollment. The Company also
plans to bring on a new leader of Marketing to help drive long-term
growth beyond the workplace.

Conference Call

The Company will host a conference call to discuss second quarter 2011
financial results today at 5:00 PM ET. Hosting the call will be Jeff
Maggioncalda, president and chief executive officer, and Ray Sims, chief
financial officer. The conference call can be accessed live over the
phone by dialing (877) 317-6789, or for international callers (412)
317-6789. A replay will be available one hour after the call and can be
accessed by dialing (877) 870-5176 or (858) 384-5517 for international
callers; the conference ID is 370667. The replay will remain available
until Friday, August 5, 2011, and an archived replay will be available
at http://ir.financialengines.com/
for 30 calendar days after the call.

About Non-GAAP Financial Measures

This press release and its attachments include certain non-GAAP
financial measures. The presentation of this financial information is
not intended to be considered in isolation or as a substitute for the
financial information prepared and presented in accordance with U.S.
generally accepted accounting principles (GAAP). These non-GAAP measures
include non-GAAP Adjusted Net Income, non-GAAP Adjusted Earnings Per
Share and non-GAAP Adjusted EBITDA. Non-GAAP Adjusted Net Income is
defined as net income (loss) before stock-based compensation expense,
net of tax, the impact of stock dividends issued and certain other items
such as the income tax benefit from the release of valuation allowances.
Non-GAAP Adjusted Earnings Per Share is defined as non-GAAP Adjusted Net
Income divided by the weighted-average of dilutive common share
equivalents outstanding. For all periods, the dilutive common share
equivalents outstanding also include on a non-weighted basis the
conversion of all preferred stock to common stock, the shares associated
with the stock dividend and the shares sold in the initial public
offering. This differs from the weighted average diluted shares
outstanding used for purposes of calculating GAAP earnings per share.
Non-GAAP Adjusted EBITDA is defined as net income (loss) before net
interest (income) expense, income tax expense (benefit), depreciation,
amortization of internal use software, amortization of direct response
advertising, amortization of deferred commission and stock-based
compensation. Further information regarding the non-GAAP financial
measures included in this press release is contained in the attachments.

To supplement the Company's consolidated financial statements presented
on a GAAP basis, management believes that these non-GAAP measures
provide useful information about the Company's core operating results
and thus are appropriate to enhance the overall understanding of the
Company's past financial performance and its prospects for the future.
These adjustments to the Company's GAAP results are made with the intent
of providing both management and investors a more complete understanding
of the Company's underlying operational results, trends and performance.

About Financial Engines

Financial Engines is the nation's largest independent investment advisor
and is committed to providing everyone the trusted retirement help they
deserve. The Company helps investors with their total retirement picture
by offering personalized retirement plans for saving, investment, and
retirement income. To meet the needs of different investors, Financial
Engines offers both Online Advice and Professional Management.
Professional Management includes Income+, which provides steady monthly
payouts from a 401(k) that can last for life. Co-founded in 1996 by
Nobel Prize-winning economist Bill Sharpe, Financial Engines works with
America's leading employers and retirement plan providers to make
retirement help available to millions of American workers. For more
information, please visit www.financialengines.com.

Forward-Looking Statements

This press release and its attachments contain forward-looking
statements that involve risks and uncertainties. These forward-looking
statements may be identified by terms such as "plan to", "will,"
"expect," "estimates," "believes," "intends," "may," "continues," "to
be" or the negative of these terms, and similar expressions intended to
identify forward-looking statements. These forward-looking statements
include, but are not limited to, statements regarding Financial Engines'
expected financial performance and outlook, its strategic operational
plans, objectives and growth strategy, demographic and other trends, its
market opportunity, its plans to invest more aggressively to take
advantage of potential growth opportunities, its plans to bring on a new
leader of marketing, and the benefits of our non-GAAP financial
measures. These statements involve known and unknown risks,
uncertainties and other factors which may cause actual results,
performance or achievements to differ materially from those expressed or
implied by such forward-looking statements, and reported results should
not be considered as an indication of future performance. These risks
and uncertainties include, but are not limited to, our reliance on fees
earned on the value of assets we manage for a substantial portion of our
revenue, the impact of the financial markets on our revenue and
earnings, unanticipated delays in rollouts of our services, our ability
to increase enrollment, our ability to correctly identify and invest
appropriately in growth opportunities, our ability to introduce new
services and accurately estimate the impact of any future services on
our business, the risk that the anticipated benefits of our investments
in these services or in growth opportunities may not outweigh the
resources and costs associated with these investments or the liabilities
associated with the operation of these services, our relationships with
plan providers and plan sponsors, the fees we can charge for our
Professional Management service, our reliance on accurate and timely
data from plan providers and plan sponsors, system failures, errors or
unsatisfactory performance of our services, our reputation, our ability
to protect the confidentiality of plan provider, plan sponsor and plan
participant data and other privacy concerns, acquisition activity
involving plan providers or plan sponsors, our ability to compete, our
regulatory environment and risks associated with our fiduciary
obligations. More information regarding these and other risks,
uncertainties and factors is contained in the Company's Form 10-K for
the year ended December 31, 2010 and the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2011, as filed with the SEC,
and in other reports filed by the Company with the SEC from time to
time. You are cautioned not to unduly rely on these forward-looking
statements, which speak only as of the date of this press release. All
information in this press release and its attachments is as of August 2,
2011 and unless required by law, Financial Engines undertakes no
obligation to publicly revise any forward-looking statement to reflect
circumstances or events after the date of this press release or to
report the occurrence of unanticipated events.

i Please see "About Non-GAAP Financial Measures" for
definitions of the terms Adjusted Net Income, Adjusted EBITDA and
Adjusted Earnings Per Share.

ii Operating metrics include both advised and
subadvised relationships.

iii Please see information regarding enrollment rates
and the component AUC in the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's 10-Q for the quarter ended March 31,
2011 filed May 9, 2011 with the Securities and Exchange Commission
("SEC") and available on the SEC's website at www.sec.gov.